Heavy Competition is Beneficial for Startups

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Start-up Companies > Best Practices > Heavy Competition is Beneficial for Startups

Heavy Competition is Beneficial for Startups
Jaap de Jonge, Editor, Netherlands
Having studied tax data of 2 million companies that were launched in the UK between 1995 and 2005, Andrew Burke and Stephanie Hussels in a short article "How Competition Strengthens Start-ups" (HBR March 2013), report that companies launched in crowded markets had higher odds of failure in the first year, but once they survived this year, had a much greater chance of surviving the first 3 years. Competition apparently helps startups thrive... The authors explain this effect by stating that a challenging environment causes young firms to focus extra on satisfying client needs on one hand and keeping costs down to a minimal level on the other hand. They advise not to spoil young entrepreneurs with too much seed capital as this might decrease the appetite to build a lean, low cost company. (...) Read more? Sign up for free

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  Heavy Competition is Good for Start Ups
Gandhi Heryanto, Management Consultant, Indonesia, Premium Member

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